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Dealer sees more challenges ahead
Senior Reporter With 2010 looming ahead, the bumpy ride of 2009 will soon be in the rearview mirror.
John Tanner of Tanner Motors in Brainerd said 2010 will continue to be a challenge for auto dealers. Tanner said November sales are about as bad as he's ever seen. Customers continue to be concerned about job security and saving money.
"I hear the same story from everybody," Tanner said. "They are just afraid to spend money."
Tanner quoted a Bloomberg report that said Chrysler Group may have to terminate as many as 145 more U.S. dealers unless those dealers are able to find lenders to finance the inventory of new vehicles.
Bloomberg quoted a Chrysler spokeswoman who said if the dealers can't get financing through GMAC, they may lose franchise agreements. GMAC asked dealers for more collateral in order to get financing, Bloomberg reported.
On Thursday, the Associated Press said General Motors Co. described November auto sales as solid and a sign the economy is beginning a slow recovery from recession. GM's Executive Director of Market Analysis Mike DiGiovanni said the U.S. auto sales could top an annual rate of 10.8 million in Novemer, which would be 2009's first month where sales rose to that level without the incentive of Cash for Clunkers rebates, the AP reported.
Edmunds.com projected the annual selling rate for November will be 10.3 million vehicles, while J.D. Power & Associates gave an estimate of 10.2 million, Bloomberg reported.
"The annual rate for November, typically a slow sales month, is adjusted for seasonal variances. Edmunds predicts light vehicle sales will drop 4.5 percent this month when compared with year-ago results. J.D. Power estimates a 7.6 percent decline," the AP reported.
But Tanner noted the annual selling rate was 17 million vehicles about four years ago.
"So what that means for everybody is there are half the cars being sold that were sold before, and for the consumer, unfortunately it means there are less used cars available.
"We're having a difficult time finding used cars," Tanner said. "We're having a real difficult time with funding through the banks."
In an outlook for automakers, Bloomberg recently reported declines for the U.S. automakers will be 35 percent for Chrysler Group LLC, 1.3 percent for General Motors Co. and 0.3 percent for Ford Motor Co., according to Edmunds.com.
Edmunds.com projected Japan's big three -Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. - will also have fewer U.S. sales. The only increase Edmunds.com reported was for Seoul, Korea-based Hyundai Motor Co.
Tanner said he doesn't expect a lot of new products from Chrysler until 2012. Tanner said another issue has been the loss of Chrysler's finance company after the government's involvement. Those finance companies were started when credit was tight and dealers couldn't get bank loans, Tanner said.
GMAC became Chrysler's financial source following the bankruptcy, Tanner said, adding that created and continues to create havoc as many dealers can't get financing for inventory.
Tanner said a number of Chrysler dealers are caught as Chrysler Finance won't release liens on buildings and GMAC won't provide financing for inventory until the liens are released.
The way of the future may mean ordering vehicles from a dealer instead of shopping for them from inventory available on lots, Tanner said.
"2010 is a year, as a dealer, I just hope to get through," Tanner said. "I don't see anything that is going to give the consumers confidence, whether it's the car business or anything else, to spend money.
"It's definitely is not going to be back like it was two or three years ago. It's ugly for the dealers out there."
RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.
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